4. What is the Double Taxation Avoidance Agreement (DTAA)?
Select the correct option from the following:
Answer: Option A - An agreement between two countries to prevent individuals from being taxed twice on the same income.
Explanation:
- A Double Taxation Avoidance Agreement (DTAA) is a bilateral agreement between two countries designed to prevent individuals or entities from being taxed twice on the same income.
- This agreement ensures that taxpayers operating in multiple jurisdictions are not subjected to double taxation, thereby promoting cross-border trade and investment.
- DTAA typically outlines rules for allocating taxing rights between the contracting countries, including provisions for tax credits, exemptions, or reduced rates.
Answer: Option A - An agreement between two countries to prevent individuals from being taxed twice on the same income.
Explanation:
- A Double Taxation Avoidance Agreement (DTAA) is a bilateral agreement between two countries designed to prevent individuals or entities from being taxed twice on the same income.
- This agreement ensures that taxpayers operating in multiple jurisdictions are not subjected to double taxation, thereby promoting cross-border trade and investment.
- DTAA typically outlines rules for allocating taxing rights between the contracting countries, including provisions for tax credits, exemptions, or reduced rates.